By Tural Heybatov
On Tuesday, March 4, Azerbaijani President Ilham Aliyev received Nail Maganov, General Director of Tatneft, Askhat Hasenov, Chairman of the Board of KazMunayGas, and Bakhodirzhon Sidikov, Chairman of the Board of Uzbekneftegaz.
During the meeting, Ilham Aliyev emphasized the importance of quadrilateral cooperation for joint production and execution of orders for friendly countries. Notably, this format is open to participation from companies and countries interested in joining.
The formation of a cooperation format involving oil and gas companies from the region is, in itself, an intriguing development, worthy of close observation. However, what has captured experts' attention most is Kazakhstan's intensified activity towards Azerbaijan. On Monday, Kazakh Prime Minister Olzhas Bektenov arrived in Baku, and on Tuesday, the President received the head of SOCAR's partner, KazMunayGas. Many saw a certain context in these visits, which can be explained.
Photo: Azertac
For several years now, Kazakhstan's oil exports have been facing challenges. After the suspension of oil transportation by the Caspian Pipeline Consortium (CPC) in August 2022, Kazakhstan has increasingly considered the need for alternatives. The suspension, ordered by the Novorossiysk City Court for 30 days, was justified by alleged environmental damage. This was not the first instance of CPC's operations being hindered by Russian environmental authorities. At the time, Kazakhstan was exporting nearly 80% of its oil through this pipeline, making the situation a significant concern for Astana and prompting thoughts of diversification. Following the incident, President Kassym-Jomart Tokayev declared the Trans-Caspian route a priority and tasked KazMunayGas with exploring optimal ways to implement it.
That same year, SOCAR and KazMunayGas signed a five-year agreement to transport 1.5 million tons of Kazakh oil annually through the Baku-Tbilisi-Ceyhan (BTC) Main Export Pipeline. A year later, SOCAR announced the start of Kazakh oil transit through BTC, and an agreement was signed to gradually increase the volume of transportation.
In addition to the Baku-Tbilisi-Ceyhan pipeline, Azerbaijan has the Baku-Supsa pipeline with a capacity of 7 million tons. Although this pipeline is currently halted, the increasing volume of Kazakh oil could potentially revive it, allowing the transportation of 3 to 3.5 million tons per year.
According to Kazakhstan's Ministry of Energy, the volume of Kazakh oil transit through BTC is projected to reach 1.5 million tons in 2025. At the time of signing the five-year contract in 2022, only 55,000 tons of Kazakh oil were being transported via the Baku-Tbilisi-Ceyhan pipeline.
Azerbaijan's transit route cannot fully replace Russian pipelines for Kazakhstan due to insufficient capacity for such volumes. Therefore, CPC remains the primary route for Kazakh oil exports.
However, on February 17, a new incident occurred. Ukrainian drones attacked the largest oil pumping station of the Caspian Pipeline Consortium, "Kropotkinskaya," located in the Krasnodar region of Russia. While Russia itself suffered minimal impact, Kazakhstan was significantly affected. The drones damaged the station's roof, gas turbine unit, distribution equipment, and other facilities, putting the station out of operation. As a result, oil transportation via the Tengiz-Novorossiysk main pipeline was switched to an emergency mode. The aftermath of the attack could take up to two months to resolve, during which oil transit from Kazakhstan through CPC is expected to decrease by 30%.
A pumping station of the Caspian Pipeline Consortium/cpc.ru
Kazakhstan's Ministry of Foreign Affairs has announced its intention to discuss this issue with Kyiv. It appears that Astana will try to persuade the Ukrainian side to refrain from targeting CPC, as such attacks harm not Russia, but Kazakhstan, a country friendly to Ukraine. According to Kazakh experts, the two-month reduction in oil transit could cost the country about 1.5 billion dollars. If repair costs are included, the total losses could reach 2 billion dollars.
Drone attacks on Russia's energy infrastructure represent a serious risk factor. The war continues, and expectations that Trump's plan might resolve the situation have stalled, suggesting that risks remain almost certain.
On the night of March 3, Ukraine struck an oil refinery located in Ufa, causing significant damage and triggering a fire. It is worth noting that Ufa is the capital of Bashkortostan, indicating that infrastructure deep within Russia is now under threat.
Kazakhstan, which has long relied on Russian transit, is now faced with the urgent need to accelerate diversification. Given that the attack on the Ufa refinery followed the controversial meeting between Trump and Zelensky in Washington, it can be seen as Kyiv's response to humiliation and blackmail. The next target is unknown, making it crucial for Kazakhstan, as a major exporter with numerous partners, to secure a safe route.
In this part of the world, there is no safer route than the Azerbaijani pipelines.
